[Star Banc Corporation Graphic Design]
STAR BANC
CORPORATION
425 WALNUT STREET
CINCINNATI, OHIO 45202
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 8, 1997
Dear Star Banc Corporation Shareholders:
The Annual Meeting of Shareholders of Star Banc Corporation
("Corporation") will be held at the JARSON-KAPLAN THEATER OF THE ARONOFF
CENTER FOR THE ARTS, SIXTH AND WALNUT STREETS, CINCINNATI, OHIO, on Tuesday,
April 8, 1997, at 11:00 a.m. Valet parking will be available. The purpose
of the meeting is to consider and act on the following:
1. To elect five directors for three year terms ending in the
year 2000.
2. To amend Article Fourth of the Articles of Incorporation of
the Corporation to increase the number of authorized shares of
common stock, $5.00 par value, from 100,000,000 to 200,000,000.
3. To approve and adopt the Star Banc Corporation 1996 Stock
Incentive Plan, attached as an Exhibit to this Proxy Statement,
under which options to purchase shares of common stock,
restricted shares and performance awards may be granted to
executives of the Corporation and its subsidiaries.
4. To transact any other business that may properly come before
the Annual Meeting.
Shareholders who are of record at the close of business on
February 21, 1997, are entitled to vote at the meeting.
Shareholders are cordially invited to attend the meeting. IF
YOU WISH TO ATTEND THE MEETING BUT YOUR SHARES ARE HELD IN THE
NAME OF A BROKER, TRUST, BANK OR OTHER NOMINEE, PLEASE BRING A
PROXY OR LETTER FROM THE BROKER, TRUSTEE, BANK OR NOMINEE WITH
YOU TO CONFIRM YOUR BENEFICIAL OWNERSHIP OF THE SHARES. Please
complete, execute and return the enclosed Proxy in the postage
paid envelope whether or not you plan to attend so that your
shares may be represented at the meeting. If you attend the
meeting, you may revoke your Proxy and vote in person if you
choose.
By order of the Board of Directors,
/s/ Jennie Carlson
Jennie P. Carlson
Senior Vice President,
Deputy General Counsel and Secretary
Cincinnati, Ohio
February 28, 1997
YOUR VOTE IS IMPORTANT. PLEASE EXECUTE AND RETURN THE ENCLOSED
PROXY PROMPTLY WHETHER OR NOT YOU INTEND TO ATTEND THE MEETING.
[Star Banc Corporation Graphic Design]
STAR BANC
CORPORATION
425 WALNUT STREET
CINCINNATI, OHIO 45202
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is provided with the solicitation of
proxies for the Board of Directors of Star Banc Corporation,
(the "Corporation"), for use at the Annual Meeting of
Shareholders to be held on April 8, 1997. A Notice of Annual
Meeting is attached and a form of proxy is enclosed. These
proxy materials are first being mailed to shareholders of the
Corporation on or about February 28, 1997.
THE PROXY
The persons named as proxies were selected by the Board of
Directors of the Corporation.
When the proxies in the enclosed form are properly executed and
returned, the shares they represent will be voted at the
meeting. Any shareholder who gives a proxy may revoke or revise
that proxy at any time before the meeting by giving written
notice to the Corporation's Secretary, by executing and
returning a later dated proxy or by voting by ballot at the
meeting.
The Corporation pays the cost to solicit proxies. In addition
to soliciting proxies by mail, directors, officers and regular
employees of the Corporation may solicit proxies by telephone or
in person without additional compensation. The Corporation may
request banks, brokerage houses or other custodians, nominees or
fiduciaries to solicit proxies and will reimburse those entities
for reasonable expenses necessary for such solicitation.
OUTSTANDING VOTING SECURITIES AND PRINCIPAL HOLDERS
XX,XXX,XXX shares of the Corporation's Common Stock, par value
$5.00, (the "Common Stock") were outstanding on the close of
business on February 21, 1997, (the "Record Date"). Each of
those shares is entitled to one vote on each matter submitted at
the meeting. Only shareholders of record at the close of
business on the Record Date are entitled to vote at the meeting.
The following table lists the holdings of the only persons
(including any "group" as that term is used in Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended) known by the
Corporation to be the beneficial owners of more than five
percent (5%) of its outstanding Common Stock on December 31,
1996. These shares as reported reflect the three for one stock
split declared on December 10, 1996, for shareholders of record
on December 31, 1996.
Name of Shares Beneficially
Beneficial Owner Address Owned Percent of Class
______________________________________________________________________________
Western Southern Life 400 Broadway 7,936,215 9.15%
Insurance Co. Cincinnati, Ohio 45202
Securities and Exchange Commission Rule 13d-3 defines
"beneficial ownership" as voting or investment decision power
over shares. Beneficial ownership does not necessarily mean
that the person enjoys any economic benefit from those shares.
The following table lists information about the beneficial
ownership of the Corporation's Common Stock by each Director,
the Chief Executive Officer and the next four highest
compensated executive officers of the Corporation in all
capacities to the Corporation and its subsidiaries during the
year ended December 31, 1996 individually, as reported to the
Corporation by those persons as of December 31, 1996. This
table reflects the three for one stock split declared on
December 10, 1996 for shareholders of record on December 31,
1996.
Shares Shares Held Pursuant to
Beneficially Deferred Compensation Percentage
Name Owned (1) Plan(4) of Ownership
_____________________________________________________________________________
James R. Bridgeland, Jr. 11,748 (2) 55,455 0.08%
Laurance L. Browning 21,045 -- 0.02%
Victoria B. Buyniski 10,611 (2) 783 0.01%
Joseph A. Campanella 231,507 (2)(3) -- 0.27%
Samuel M. Cassidy 359,199 (2) -- 0.41%
V. Anderson Coombe 166,104 (2) 75,381 0.28%
John C. Dannemiller 2,400 (2) 10,923 0.02%
Richard K. Davis 200,697 (2)(3) 3,303 0.24%
Jerry A. Grundhofer 940,086 (2)(3) 45,516 1.14%
J. P. Hayden, Jr. 995,178 (5) -- 1.15%
Roger L. Howe 151,740 (2) -- 0.17%
Thomas J. Klinedinst, Jr. 66,336 (2)(6) -- 0.08%
Jerome C. Kohlhepp 187,917 (2)(3) 8,931 0.23%
Charles S. Mechem, Jr. 18,255 (2) -- 0.02%
Daniel J. Meyer 2,700 (2) 14,625 0.02%
David M. Moffett 197,136 (2)(3) 8,064 0.24%
David B. O'Maley 259,500 (2)(7) 381 0.30%
O'dell M. Owens, M.D. 3,000 (2) 11,100 0.02%
Thomas E. Petry 3,900 (2) 49,935 0.06%
William C. Portman 51,015 (2) 54,579 0.12%
Oliver W. Waddell 361,800 -- 0.42%
___________________________________________________________________________
Total 4,241,874 338,976 5.28%
(1) Listed shares may include shares held in the name of a
person's spouse, minor children, other relatives and trusts and
estates as to which beneficial ownership is disclaimed.
(2) Includes shares which may be purchased upon exercise of
presently exercisable options or options exercisable in 60 days
in the following amounts: Mr. Bridgeland, 1,500 shares; Ms.
Buyniski, 1,500 shares; Mr. Campanella, 195,429 shares; Mr.
Cassidy, 1,500 shares; Mr. Coombe, 1,500 shares; Mr.
Dannemiller, 1,500 shares; Mr. Davis, 195,000 shares; Mr.
Grundhofer, 825,000 shares; Mr. Howe, 1,500 shares; Mr.
Klinedinst, 1,500 shares; Mr. Kohlhepp, 92,874 shares; Mr.
Mechem, 1,500 shares; Mr. Meyer, 1,500 shares; Mr. Moffett,
195,000 shares; Mr. O'Maley, 1,500 shares; Dr. Owens, 1,500
shares; Mr. Petry, 1,500 shares and Mr. Portman, 1,500 shares.
(3) Includes the following shares which are held for the
individual's account in the Corporation's Thrift Savings 401(k)
Plan: Mr. Campanella, 11,211 shares; Mr. Davis, 933 shares; Mr.
Grundhofer, 3,762 shares; Mr. Kohlhepp, 13,425 shares; and Mr.
Moffett, 2,136 shares.
(4) Listed shares are those held pursuant to the Star Banc
Corporation Deferred Compensation Plan (the "Deferred
Compensation Plan"); under the terms of the trust in which they
are held such shares are subject to creditors of the Corporation
and may not be voted until released to the individual
participants.
(5) Includes shares which are owned by companies for which Mr.
Hayden serves as Chairman, CEO and Director in the following
amounts: The Midland Company, 41,943 shares; American Family
Home Insurance Company, 452,400 shares; American Modern Home
Insurance Company, 192,000 shares; American Western Home
Insurance Company, 108,600 shares; and American Modern Life
Insurance Company of Ohio, 25,200 shares.
(6) Includes 6,600 shares which are owned by Thomas E. Wood,
Inc., for which Mr. Klinedinst serves as Chairman and Chief
Executive Officer.
(7) Includes 240,000 shares which are owned by Ohio National
Life Insurance Company, for which Mr. O'Maley serves as
Chairman, President and Chief Executive Officer.
ELECTION OF DIRECTORS
The Corporation's Articles of Incorporation provide that the
number of directors constituting the Board of Directors shall be
not less than nine nor more than twenty-five as determined in
accordance with the Code of Regulations from time to time. The
Board of Directors is divided into three classes: Class I
(terms expire in 1999), Class II (terms expire in 1997) and
Class III (terms expire in 1998). The Articles of Incorporation
provide that nominees for each Class of the Board of Directors
are to be elected to serve for a term of three years. The Board
of Directors currently consists of seventeen members, with Class
I containing six directors, Class II containing five directors
and Class III containing six directors.
At the 1997 Annual Meeting, five directors in Class II are to
be elected to hold office until the Annual Meeting in the year
2000 and until their successors are duly elected and qualified.
All of the nominees are current directors. The persons named in
the Proxy intend to vote for the election of these nominees. If
any nominee becomes unable to serve, which is not anticipated,
the proxies will be voted for any substitute nominee that
Management recommends.
The following information concerns the nominees and continuing
directors:
CLASS I DIRECTORS
(TERMS EXPIRE IN 1999)
JAMES R. BRIDGELAND, JR.: born 1929, Director since 1975. Mr.
Bridgeland has been a partner in the law firm of Taft,
Stettinius & Hollister for more than five years.
SAMUEL M. CASSIDY: born 1932, Director since 1991. Mr.
Cassidy served as an Executive Vice President of the Corporation
from 1985 to his retirement in 1994. He is a Director of Star
Bank, N.A., the Corporation's primary subsidiary, from 1980
through the present and was that Bank's President from 1984 and
its Chief Executive Officer from 1988 to his 1994 retirement.
V. ANDERSON COOMBE: born 1926, Director since 1963. Mr.
Coombe is Chairman of the Board, Treasurer and a Director of Wm.
Powell Co. and has served in that capacity for more than five
years. He is a Director of Eagle-Picher Industries, Inc. and
The Union Central Life Insurance Co.
CHARLES S. MECHEM, JR.: born 1930, Director since 1968. Mr.
Mechem is Chairman of Cincinnati Bell, Inc. He was
Commissioner of the LPGA from 1991 through 1995. Mr. Mechem was
also Chairman of the Board of U.S. Shoe Corporation from April,
1993 to May, 1995. Mr. Mechem is the retired Chairman and CEO
of the former Taft Broadcasting Company, having served in that
executive capacity for more than five years. He is a Director
of AGCO Corporation, Cincinnati Bell, Mead Corporation, Ohio
National Life Insurance Company and J.M. Smucker Company.
O'DELL M. OWENS, M.D.: born 1947, Director since 1991. Dr.
Owens has been Director of Reproductive Endocrinology and
Infertility for the Christ Hospital of Cincinnati since 1986.
From 1982 to 1986, Dr. Owens was Assistant Professor of
Obstetrics and Gynecology, Director of the Division of
Reproductive Endocrinology and Infertility and Assistant
Professor of Orthopedics at the University of Cincinnati Medical
Center.
THOMAS E. PETRY: born 1939, Director since 1987. Mr. Petry is
Chairman and Chief Executive Officer of Eagle-Picher Industries,
Inc., which he has served in an executive capacity for more than
five years. An order confirming the re-organization of
Eagle-Picher Industries, Inc. was entered by the Bankruptcy
Court on November 18, 1996 and became effective on November 29,
1996. Mr. Petry is also a Director of CINergy, Wm. Powell Co.,
Union Central Life Insurance Company and Insilco Corporation.
CLASS II DIRECTORS
(NOMINEES FOR TERMS TO EXPIRE IN 2000)
LAURANCE L. BROWNING, JR.: born 1929, Director since 1970.
Mr. Browning was formerly Vice Chairman of Emerson Electric Co.,
a manufacturer of electrical equipment and controls. Prior to
his retirement, he served Emerson Electric Co. in an executive
capacity for more than five years. He is a Director of Emerson
Electric Co.
VICTORIA B. BUYNISKI: born 1951, Director since 1991. Ms.
Buyniski is Founder, President and Chief Executive Officer of
United Medical Resources, Inc. and has served that company in an
executive capacity since 1983. Ms. Buyniski is a Director of
The Health Alliance and Ohio National Life Insurance Company.
JERRY A. GRUNDHOFER: born 1944, Director since 1993. Mr.
Grundhofer is Chairman, President and CEO of the Corporation and
of Star Bank, N.A. and has served Star in an executive capacity
since 1993. Mr. Grundhofer is a Director of Arete Associates,
the Federal Reserve Bank Board of Cleveland, the Hennegan
Company, Visa U.S.A., Inc. and Visa International.
J. P. HAYDEN, JR.: born 1929, Director since 1973. Mr. Hayden
is Chairman of the Board, Chief Executive Officer and a Director
of The Midland Company and has served that company in an
executive capacity for more than five years.
DANIEL J. MEYER: born 1936, Director since 1988. Mr. Meyer is
Chairman, Chief Executive Officer and a Director of Cincinnati
Milacron, Inc. and has served that company in an executive
capacity for more than five years. Mr. Meyer is a Director of
E. W. Scripps Co. and Hubbell, Incorporated.
CLASS III DIRECTORS
(TERMS EXPIRE IN 1998)
JOHN C. DANNEMILLER: born 1938, Director since 1990. Mr.
Dannemiller is Chairman, Chief Executive Officer and President
of Applied Technologies, formerly known as Bearings, Inc. and
has served in that capacity for more than five years. Mr.
Dannemiller is a Director of Lamson & Sessions Co.
ROGER L. HOWE: born 1935, Director since 1985. Mr. Howe is
Chairman of the Board of U. S. Precision Lens, Inc. and has
served in that capacity for more than five years. Mr. Howe is
a Director of Cincinnati Bell, Inc., Cintas Corporation,
Eagle-Picher Industries, Inc. and Baldwin Piano and Organ
Company.
THOMAS J. KLINEDINST, JR.: born 1942, Director since 1993.
Mr. Klinedinst is Chairman and Chief Executive Officer of Thomas
E. Wood, Inc. and has served that company in an executive
capacity for more than five years. Mr. Klinedinst is Director
and Chairman of Franciscan Health Systems of Ohio Valley and
Director and Treasurer of the Better Business Bureau of
Cincinnati.
WILLIAM C. PORTMAN: born 1922, Director since 1985. Mr.
Portman is Chairman of the Board of Portman Equipment Company
and has served in that capacity for more than five years.
OLIVER W. WADDELL: born 1930, Director since 1982. Prior to
his retirement December 31, 1993, Mr. Waddell was Chairman of
the Board of the Corporation and Vice Chairman of Star Bank,
N.A. Mr. Waddell is a Director of CINergy, Ohio National Life
Insurance Company, and Chiquita Brands International, Inc.
DAVID B. O'MALEY: born 1946, Director since 1995. Mr. O'Maley
is Chairman, President and Chief Executive Officer of Ohio
National Life Insurance Company and serves several affiliated
affiliates and subsidiaries similarly, and has served in that
capacity since 1994. From 1993 to 1994, he was President and
Chief Operating Officer and from 1992 to 1993, he was Executive
Vice President and Chief Marketing Officer of Ohio National Life
Insurance Company. Prior to that he was Chief Marketing Officer
of Life of Virginia.
Several of the nominees and continuing directors served as
directors of The First National Bank of Cincinnati (now known as
Star Bank, N.A.,) prior to the formation of the Corporation as a
bank holding company in 1973 and as directors of the
Corporation's predecessor Delaware corporation from the dates
listed.
PROPOSAL TO AMEND ARTICLE FOURTH OF THE
ARTICLES OF INCORPORATION OF THE CORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
The reason to increase the number of authorized shares of
Common Stock is to provide additional shares which can be issued
for corporate purposes without further stockholder approval
unless required by applicable law, the New York Stock Exchange
or any other stock exchange on which the Corporation's shares
are traded. The purposes for which shares may be issued
include the payment of stock dividends, subdivision of
outstanding shares through stock splits, effecting future
acquisitions or meeting requirements for working capital or
capital expenditures. No such transactions are planned by the
Corporation at present.
To the extent that additional shares may be issued on other
than a pro rata basis to current shareholders, the present
ownership position of current shareholders may be diluted.
Holders of shares of common stock have no rights of appraisal
or similar rights of dissenting shareholders with respect to the
proposed increase in the number of authorized shares of common
stock.
THE BOARD OF DIRECTORS INTENDS TO SUBMIT THE FOLLOWING
RESOLUTION TO SHAREHOLDERS FOR ACTION AT THE ANNUAL MEETING:
RESOLVED: THAT ARTICLE FOURTH, PARAGRAPH A. OF THE ARTICLES OF
INCORPORATION OF THE CORPORATION AS PRESENTLY IN EFFECT BE AND
IS AMENDED AND RESTATED AS FOLLOWS:
FOURTH: A. THE TOTAL NUMBER OF SHARES OF STOCK WHICH THE
CORPORATION SHALL HAVE AUTHORITY TO ISSUE IS TWO HUNDRED ONE
MILLION (201,000,000), OF WHICH ONE MILLION (1,000,000) SHARES
SHALL BE SHARES OF PREFERRED STOCK WITHOUT PAR VALUE
(HEREINAFTER SOMETIMES REFERRED TO AS "PREFERRED STOCK") AND TWO
HUNDRED MILLION (200,000,000) SHARES SHALL BE SHARES OF COMMON
STOCK OF THE PAR VALUE OF FIVE DOLLARS ($5.00) PER SHARE
(HEREINAFTER SOMETIMES REFERRED TO AS "COMMON STOCK").
The affirmative vote of the holders of a majority of the
outstanding shares of common stock entitled to vote at the
meeting is required for adoption. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE "FOR" ADOPTION OF THE AMENDMENT.
PROPOSAL TO ADOPT THE
STAR BANC CORPORATION 1996 STOCK INCENTIVE PLAN
The Board of Directors of the Corporation, at its meeting on
December 10, 1996, approved the Compensation Committee's
recommendation to adopt a new stock incentive plan for senior
management. This plan will be known as the Star Banc
Corporation 1996 Stock Incentive Plan, (the "Plan"), and will
incorporate the administration of option and restricted stock
grants made under the currently existing 1986 and 1991 Stock
Incentive Plans.
The Plan provides for an additional 7.5 million shares (2.5
million before the three for one stock split declared on
December 10, 1996, for shareholders of record on December 31,
1996) of common stock for Plan purposes. The current 1991
Plan, as amended, provided for 2.5 million shares, (7.5 million
after the three for one stock split declared on December 10, 1996
for shareholders of record on December 31, 1996), substantially
all of which have been granted as stock options. Shares from
the Plan will be used to provide material performance based
incentives for the continued service of key employees and to
attract qualified executives to employment with the Corporation
and its subsidiaries.
The Plan provides for the grant of options to purchase shares
of common stock, either incentive stock options or non-qualified
options; for the grant of shares of common stock which are
subject to restriction on transfer and to a right of repurchase
by the Corporation; and for awards of common stock or cash based
upon the performance of the Corporation. Options granted
pursuant to the Plan will qualify as performance based
compensation as defined in the Regulations applicable to
Internal Revenue Code Section 162(m). THE COMPLETE TEXT OF THE
PLAN IS ATTACHED TO THIS PROXY STATEMENT AS AN EXHIBIT. PLEASE
REFER TO IT FOR FULL PLAN PARTICULARS.
The Plan became effective as of December 10, 1996, the date on
which the Board voted. If the Plan is not approved by vote of
holders of a majority of the outstanding shares of the
Corporation, however, the Plan will not grant incentive stock
options. To date, no options, restricted shares, or other
awards have been granted under this plan.
Shares may be granted under the Plan until December 9, 2006.
The Board of Directors may terminate the Plan at any time, but
unexercised options will continue and any restricted shares
shall continue subject to the terms of the Plan. Except as
otherwise provided in any grant to an employee under the Plan,
in the event the Corporation should consolidate with, merge
into, or transfer all of its assets to another corporation or
corporations, each option, restricted share or performance award
shall, without regard to any vesting schedule, restriction or
performance target, become fully exercisable or payable, as the
case may be, immediately prior to such consolidation, merger or
transfer.
The Plan contains no maximum limitation as to the number of
participants. Regular employees of the Corporation and its
subsidiaries who are key employees, including officers, whether
or not directors of the Corporation, shall be eligible to
participate in the Plan. In 1996, 146 employees participated
in the 1991 Plan.
The proceeds of the sale of stock under the Plan will
constitute general funds of the Corporation and may be used by
it for any purpose.
Neither the grant nor the exercise of an option under the Plan
will result under present accounting practices in any charge
against the Corporation's earnings. Any tax benefits accruing
to the Corporation upon the exercise by an employee of an
option, or upon his subsequent disposition of shares obtained by
the option, will be reflected in the Corporation's capital
accounts and will have no impact on earnings of the Corporation.
Under present accounting practices the grant of restricted
shares at prices below fair market value will result in
compensation expense to the Corporation. The expense and
related tax benefits will be recognized systematically in the
Corporation's financial statements over the applicable
restricted periods. The payment of stock or cash to
participants as performance awards will also result in
compensation expense to the Corporation under present accounting
practices.
THE BOARD OF DIRECTORS INTENDS TO SUBMIT THE FOLLOWING
RESOLUTION TO SHAREHOLDERS FOR ACTION AT THE ANNUAL MEETING:
RESOLVED, THAT THE STAR BANC CORPORATION 1996 STOCK INCENTIVE
PLAN BE, AND HEREBY IS, APPROVED AND ADOPTED BY THE SHAREHOLDERS
OF THE CORPORTION.
The affirmative vote of the holders of a majority of all
outstanding shares of Common Stock is required for the approval
and adoption of the 1996 Stock Incentive Plan. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL AND ADOPTION OF THE
PLAN.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of Star Banc Corporation is composed
entirely of independent outside directors and is responsible for
setting corporate compensation policy. The goal of the
Corporation's compensation program is to attract, motivate,
reward and retain the management talent required to achieve
corporate objectives and increase shareholder value.
Base salaries of all executives except Mr. Grundhofer were
determined by the Compensation Committee using senior
management's recommendations. Salaries were decided based on
individual performance and industry standards as determined in
the Hewitt Associates Compensation Survey and information from
regional bank holding companies.
The Compensation Committee administers the Executive Bonus
Plan, whose purpose is to reward the achievement of Corporate
financial objectives established in advance by the Compensation
Committee. The performance measures for determining plan awards
include fully diluted earnings per share (EPS), return on
average equity (ROE), return on average assets (ROA) (EPS, ROE,
and ROA are listed in this Compensation Committee Report after
taking into account the three for one stock split declared on
December 10, 1996 for shareholders of record on December 31,
1996), credit quality and individual performance against
established objectives. The plan provides awards, however, only
if the Corporation's EPS and ROE reach specified thresholds
established by the Compensation Committee and approved by the
Board of Directors at the beginning of each plan year. The
opportunity for a bonus award for the Named Executives in 1996
ranged from 20% to 125% of base salary depending on the
individual's position, and the amount by which actual EPS and
ROE exceeded the thresholds set. The initial threshold for a
bonus award was $1.60 EPS and 15.50% ROE, which would have
resulted in record net income for the Corporation. Reported EPS
was $1.79 and reported ROE was 18.95%. However, excluding the
effects of the congressionally mandated one-time SAIF
assessment, EPS and ROE would have been $1.82 and 19.34%,
respectively. The matter concerning the SAIF assessment was
reviewed by the Compensation Committee, and the Committee
elected to exclude the assessment for purposes of calculating
bonus awards under the Plan. Bonuses were paid in cash for all
but 13 executives (who comprise the Management Committee of the
Corporation), whose bonuses were paid 75% in cash and 25% in the
Corporation's common stock.
The Compensation Committee also administers the Corporation's
Stock Incentive Plan (see Exhibit and discussion), whose purpose
is to incent long-term growth in the Corporation's shareholder
value. Stock options and restricted stock are granted pursuant
to the plan, using guidelines which include corporate
performance, individual responsibilities and performance, and
competitive indices including the Hewitt Associates Compensation
Survey and information from regional bank holding companies.
1996 options are subject to a vesting schedule with full vesting
four years from the date of grant.
Mr. Grundhofer's compensation was determined by the
Compensation Committee and approved by the Board. His 1996 base
salary of $700,000 was established under the terms of his
employment agreement with the Corporation, and is consistent
with industry standards as determined from the Hewitt Associates
Compensation Survey. His bonus was based on the same criteria
as that described previously for the other Executive Officers.
He was granted options for 180,000 shares (after the three for
one stock split declared December 10, 1996 for shareholders of
record on December 31, 1996) on December 10, 1996 exercisable
pursuant to a 4-year vesting schedule at a grant price of
$30.33.
Compensation Committee of
Star Banc Corporation Board of Directors
Laurance L. Browning, Jr. Roger L. Howe Charles S. Mechem, Jr.
Daniel J. Meyer David B. O'Maley Thomas E. Petry
The following tables list information on compensation received
for services by the Chief Executive Officer and the next four
highest compensated executive officers of the Corporation in all
capacities to the Corporation and its subsidiaries during the
year ended December 31, 1996. Options for shares of Corporate
stock listed in the tables reflect the number of shares after
the three for one stock split declared on December 10, 1996, for
shareholders of record on December 31, 1996.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation All Other
_________________________ _________________________ ____________
Name and Salary Bonus Other Options Stock Compensation
Principal Position Year ($)(1) ($)(2) ($) (#) Award ($) ($)
_______________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C>
Jerry A. Grundhofer 1996 700,000 875,000 -- 180,000 -- 12,130(4)
Chairman, President, Chief 1995 625,000 781,250 86,354 180,000 1,826,250(3) 11,423
Executive Officer and 1994 575,192 718,990 113,674 360,000 -- 11,319
Director
Richard K. Davis 1996 275,000 280,500 -- 75,000 -- 9,285(5)
Executive Vice President 1995 250,000 255,000 -- 60,000 -- 8,373
1994 225,000 229,500 105,359 60,000 -- 832
David M. Moffett 1996 275,000 280,500 -- 75,000 -- 9,286(6)
Executive Vice President and Chief 1995 250,000 255,000 -- 60,000 -- 8,393
Financial Officer 1994 225,000 229,500 76,650 60,000 -- 2,668
Joseph A. Campanella 1996 225,000 229,500 -- 22,500 -- 7,667(7)
Executive Vice President 1995 220,000 224,400 -- 22,500 -- 7,473
1994 220,000 224,400 -- 30,000 -- 7,432
Jerome C. Kohlhepp 1996 190,000 178,600 -- 30,000 -- 5,700(8)
Executive Vice President 1995(9) -- -- -- -- -- --
1994(9) -- -- -- -- -- --
</TABLE>
(1) Includes amounts deferred at the direction of the executive
officer pursuant to the Star Banc Corporation Thrift Savings
401(k) Plan and the Star Banc Corporation Deferred Compensation
Plan, as amended and restated through January 1, 1995.
(2) Reflects bonus earned during the fiscal year. In some
instances all or a portion of the bonus was paid during the next
year.
(3) Shares will be issued on the fifth anniversary of the award
date of 12/12/95. Dividend equivalents are paid to the grantee.
As of December 31, 1996 a total of 90,000 shares of stock was
reserved for Mr. Grundhofer, and the value of said shares (based
upon the closing market value of $30.625 per share on said date)
was $2,756,250.
(4) Includes $9,500 Corporate contribution to the Star Banc
Corporation Thrift Savings 401(k) Plan and $2,630 split dollar
life insurance premium. Split dollar insurance premiums are
based on the cost of equivalent group term coverage.
(5) Includes $8,250 Corporate contribution to the Star Banc
Corporation Thrift Savings 401(k) Plan and $1,035 split dollar
life insurance premium. Split dollar insurance premiums are
based on the cost of equivalent group term coverage.
(6) Includes $8,250 Corporate contribution to the Star Banc
Corporation Thrift Savings 401(k) Plan and $1,036 split dollar
life insurance premium. Split dollar insurance premiums are
based on the cost of equivalent group term coverage.
(7) Includes $6,750 Corporate contribution to the Star Banc
Corporation Thrift Savings 401(k) Plan and $917 split dollar
life insurance premium. Split dollar insurance premiums are
based on the cost of equivalent group term coverage.
(8) Includes $5,700 Corporate contribution to the Star Banc
Corporation Thrift Savings 401(k) Plan.
(9) Mr. Kohlhepp was not listed in the Summary Compensation
Table in 1995 or 1994.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
___________________________________________________________________________________________________
(a) (b) (c) (d) (e) (f)(1)
% of Total Options
Individual Grants Options Granted to Employees Exercise or Expiration Grant date
Name Granted (#) in Fiscal Year base price ($) Date present value ($)
____________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Jerry A. Grundhofer 180,000 6.9 30.33 12/09/06 $1,324,620
Richard K. Davis 75,000 2.9 30.33 12/09/06 551,925
David M. Moffett 75,000 2.9 30.33 12/09/06 551,925
Joseph A. Campanella 22,500 0.9 30.33 12/09/06 165,576
Jerome C. Kohlhepp 30,000 1.2 30.33 12/09/06 220,770
</TABLE>
(1) Grant date option values calculated through use of the
"Black Scholes" option pricing model. Values are calculated
assuming a risk free rate of return of 6.22%, dividend growth
rate of 11.54% annually, volatility rate of 15.98% and quarterly
reinvestment of dividends. No adjustments have been made for
nontransferability or risk of forfeiture.
<TABLE>
<CAPTION>
AGGREGATED OPTIONS EXERCISED IN LAST FISCAL YEAR
AND YEAR END OPTION VALUE
__________________________________________________________________________________________________________
(a) (b) (c) (d) (e)
Number of Value of unexercised
unexercised in the money options
Shares acquired Value realized options 12/31/96 (#) 12/31/96 ($)
Name on exercise (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
__________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Jerry A. Grundhofer - - 825,000/495,000 13,796,250/4,803,750
Richard K. Davis - - 195,000/150,000 3,616,250/1,066,875
David M. Moffett - - 195,000/150,000 3,603,750/1,066,875
Joseph A. Campanella 1,500 27,250 195,429/67,878 3,955,276/728,057
Jerome C. Kohlhepp 50,430 807,735 92,874/76,503 1,837,005/702,682
</TABLE>
Stock Performance Chart. The following chart compares the
yearly percentage change in the cumulative total shareholder
return on the Corporation's common stock during the five years
ended December 31, 1996, with the cumulative total return on the
Keefe, Bruyette & Woods, Inc. 50 Bank Stock Index and the
Standard & Poor's 500 Stock Index. The comparison assumes $100
was invested on January 1, 1992 in the Corporation's Common
Stock and in each of the foregoing indices and assumes
reinvestment of dividends.
[stock performance bar graph appears in paper format with the following
points plotted]
1991 1992 1993 1994 1995 1996
____ ____ ____ ____ ____ ____
Star Banc Corp. $100.00 $148.69 $149.21 $160.89 $271.91 $430.40
KBW 50 Index $100.00 127.42 134.48 127.62 204.40 289.14
S&P 500 $100.00 107.61 118.52 120.06 165.22 202.82
Defined Benefit Pension Plan. Compensation in the form of
payments from the Corporation's non-contributory, defined
benefit pension plan is not included in the previous
compensation tables. Substantially all employees are eligible
to receive benefits from this pension plan, which are based upon
average base salary during the five consecutive calendar years
in which compensation was the highest and upon the employee's
years of service, with a normal retirement age of 65 and five
years of plan participation. The 1997 total of annual payments
as a life annuity with 120 guaranteed payments (exclusive of
Social Security) from the pension plan may be individually
estimated using the following information.
YEARS OF SERVICE
__________________________________________________________________________
Current
Annual
Earnings 10 15 20 25 30 35
__________________________________________________________________________
125,000 15,547 23,321 31,095 38,868 46,642 54,416
150,000 18,957 28,435 37,913 47,392 56,870 66,348
175,000 22,366* 33,549* 44,732* 55,916* 67,099* 78,282*
200,000 25,776* 38,664* 51,551* 64,439* 77,327* 90,215*
225,000 29,185* 43,778* 58,370* 72,963* 87,556* 102,148*
250,000 32,595* 48,892* 65,189* 81,486* 97,784* 114,081*
300,000 39,414* 59,120* 78,827* 98,534* 118,241* 137,947*
400,000 53,051* 79,577* 106,103* 132,628* 159,154* 185,679*
500,000 66,689* 100,034* 133,378* 166,723* 200,067* 233,412*
600,000 80,327* 120,491* 160,654* 200,818* 240,981* 281,145*
700,000 93,965* 140,947* 187,930* 234,912* 281,895* 328,877*
800,000 107,603* 161,404* 215,206* 269,007* 322,808* 376,610*
900,000 121,241* 181,861* 242,481* 303,102* 363,722* 424,342*
1,000,000 134,879* 202,318* 269,757* 337,196* 404,636* 472,075*
1,100,000 148,516* 222,775* 297,033* 371,291* 445,549* 519,807*
1,200,000 162,154* 243,231* 324,308* 405,386* 486,463* 567,540*
1,300,000 175,792* 263,688* 351,584* 439,480* 527,376* 615,272*
1,400,000 189,430* 284,145* 378,860* 473,575* 568,290* 663,005*
1,500,000 203,068* 304,602* 406,136* 507,669* 609,203* 710,737*
[*] The benefits in the [noted] shaded area do not reflect the $160,000
compensation limit or the $115,821 annual benefit limit which
apply under Federal law. The actual benefits payable from the
qualified pension plan will take into account these limits, and
will be adjusted accordingly as the limits are adjusted each
year. These benefits were estimated using a five year average
of compensation determined from the "Current Annual Earnings"
shown above.
For purposes of computing benefits under this Plan, on December
31, 1996, Mr. Grundhofer had 4 years of credited service; Mr.
Campanella, 9; Mr. Davis, 3; Mr. Kohlhepp, 10; and Mr.
Moffett, 3.
Non-Qualified Retirement Plan. Compensation in the form of
payments from the Corporation's non-contributory, non-qualified
retirement plan to replace income lost due to legislated limits
on benefits and compensation is included in the table. The plan
provides vested supplemental retirements to certain officers of
the Corporation so that participants receive a combined pension
benefit under the qualified and non-qualified plans at one of
two levels. Participants approved for the first level receive
benefits equal to those which would have been payable in the
absence of legislated limits on compensation and benefits, and
include Mr. Kohlhepp and certain other executive officers.
Participants eligible for the second level of augmented combined
benefits under the qualified, non-qualified and certain other
prior employer plans as a percentage of final average
compensation (base plus bonus) include Messrs. Grundhofer,
Campanella, Davis, and Moffett. Eligibility for such augmented
benefits is determined by the Compensation Committee of the
Board of Directors based on individual performances and level of
responsibility. The 1997 total of annual payments as a life
annuity with 120 guaranteed payments at the augmented level
(less benefits replaced due to the application of legislated
limits) may be individually estimated using the following table.
YEARS OF SERVICE
_____________________________________________________________________
CURRENT
ANNUAL
EARNINGS 10 15 20 25 30 35
_____________________________________________________________________
125,000 52,642 44,868 37,094 29,321 21,547 13,773
150,000 62,870 53,392 43,914 34,435 24,957 15,479
175,000 73,099 61,916 50,733 39,549 28,366 17,183
200,000 83,327 70,439 57,552 44,664 31,776 18,888
225,000 93,556 78,963 64,371 49,778 35,185 20,593
250,000 103,783 87,486 71,189 54,892 38,594 22,297
300,000 124,240 104,534 84,827 65,120 45,413 25,707
400,000 165,154 138,628 112,102 85,577 59,051 32,526
500,000 206,067 172,722 139,378 106,033 72,689 39,344
600,000 246,981 206,817 166,654 126,490 86,327 46,163
700,000 287,895 240,913 193,930 146,948 99,965 52,983
800,000 328,808 275,007 221,205 167,404 113,603 59,801
900,000 369,722 309,102 248,482 187,861 127,241 66,621
1,000,000 410,635 343,196 275,757 208,318 140,878 73,439
1,100,000 451,549 377,290 303,032 228,774 154,516 80,258
1,200,000 492,463 411,386 330,309 249,231 168,154 87,077
1,300,000 533,376 445,480 357,584 269,688 181,792 93,896
1,400,000 574,290 479,575 384,860 290,145 195,430 100,715
1,500,000 615,203 513,669 412,135 310,602 209,068 107,534
Employment Agreements. The Corporation has entered into
employment agreements with severance benefits with Messrs.
Grundhofer, Davis, Moffett, Campanella and Kohlhepp. The
agreements are designed to enhance the Corporation's ability to
attract and retain high caliber senior management at a time when
mergers and acquisitions are common in the financial services
industry. In general, the agreements provide for the payment of
a lump sum benefit to the officer, including a gross-up for
federal excise tax purposes if necessary pursuant to Section
280G of the Internal Revenue Code, plus the continuation of
certain medical and insurance benefits, in the event that the
officer's employment is terminated involuntarily by the
Corporation, or voluntarily by the officer for good reason,
following a Change in Control of the Corporation during the
officer's protected period. Change in Control is defined in the
document and includes certain mergers, sales of assets or tender
offers.
Among other things, Mr. Grundhofer's agreement provides for
severance benefits of three times salary and bonus in the event
of a qualified termination during his Employment Period (either
before or following a Change in Control). In addition, Mr.
Grundhofer's agreement provides for the granting of past
employer service credit for vesting purposes under the
Non-Qualified Retirement Plan upon three years of service. Mr.
Grundhofer's rights in the Non-Qualified Retirement Plan are
fully vested. Messrs. Davis, Moffett and Campanella have
agreements which provide for lump sum benefits of three times
salary and bonus in the event of a qualified termination
following a Change in Control during the officer's protected
period. Mr. Kohlhepp has a similar agreement providing for lump
sum benefits of two times salary and bonus.
Retention Agreements. The Corporation has entered into
retention agreements with Messrs. Davis, Moffett, Campanella,
and Kohlhepp. The agreements are designed to allow the
Corporation to maintain, reward and encourage continuity and
excellence in senior management. The agreements provide for a
lump sum payment in the event that the executive remains in good
standing in his position with the Corporation for a specified
period of time. The agreements provide, respectively, for
payments of $350,000 to Mr. Davis, $350,000 to Mr. Moffett,
$250,000 to Mr. Kohlhepp, and $200,000 to Mr. Campanella if each
executive is actively employed with the Corporation on January
1, 2000.
COMPENSATION OF DIRECTORS
In 1996 each Director of the Corporation other than Mr.
Grundhofer received an annual retainer fee of $15,000 plus a
fee of $1,500 for each Board meeting attended and a fee of $850
for each Committee meeting attended. In addition, the Audit,
Community Outreach and Fair Lending, Compensation and Governance
Committee Chairmen receive an annual retainer fee of $2,500.
Each director of the Corporation also received an option to
purchase 6,000 shares of Star Banc Corporation stock, subject to
a four-year vesting schedule. This number reflects the three
for one stock split declared December 10, 1996, for
shareholders of record on December 31, 1996.
CORPORATE GOVERNANCE INFORMATION
The Board of Directors held eight meetings in 1996.
The Board of Directors has an Executive Committee, an Audit
Committee, a Compensation Committee, a Community Outreach and
Fair Lending Committee and a Governance Committee.
The Executive Committee held ten meetings in 1996. The
Committee has the authority to exercise all powers of the Board
of Directors between regularly scheduled Board meetings. The
current members of the Executive Committee are Messrs.
Bridgeland, Cassidy, Grundhofer, Hayden, Howe, Petry, Portman
and Waddell.
The Audit Committee held two meetings in 1996 and reviewed the
work of Arthur Andersen LLP, the Corporation's outside
independent auditors for 1996. The Committee reviews
recommendations on various matters made by Arthur Andersen LLP
and action taken by management and the Corporation's internal
auditor to implement these recommendations. The Committee also
considers the proposals of Arthur Andersen LLP for the scope of
the audit to be performed for the Corporation and its
subsidiaries and their proposed fees for this work. The
Committee recommends action to the Board of Directors of the
Corporation in connection with all the above matters. The
current members of the Audit Committee are Ms. Buyniski and
Messrs. Coombe, Hayden, Howe, Klinedinst and Petry.
The Compensation Committee sets policy for compensation,
reviews the recommendations of the Chief Executive Officer as
for compensation of officers, establishes the compensation of
the Chief Executive Officer and approves eligibility for
benefits under the Corporation's Non-Qualified Retirement Plan.
It also administers the Corporation's Stock Incentive Plans.
The Compensation Committee held four meetings in 1996. The
current members of the Compensation Committee are Messrs.
Browning, Howe, Mechem, Meyer, O'Maley and Petry.
The Community Outreach and Fair Lending Committee held four
meetings in 1996. The Committee is responsible for reviewing
the Corporation's activities with respect to community
development and compliance with the Community Reinvestment Act
and fair lending regulations. The current members of the
Community Outreach and Fair Lending Committee are Messrs.
Dannemiller, Klinedinst, Portman and Dr. Owens.
The Governance Committee held three meetings in 1996. The
Committee administers the affairs of the Board of Directors,
evaluates current directors, and nominates new directors. The
current members of the Governance Committee are Messrs.
Bridgeland, Browning, Dannemiller, Hayden and Portman.
Shareholders who wish to suggest director nominees should
contact the Committee by mail at the Corporate Headquarters.
All Directors attended at least 75% of the aggregate of
the number of regular and special meetings of the Board of
Directors held during 1996 and all committees of the Board on
which the director served during the 1996 calendar year.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Corporation's directors and named executive officers to file
with the Securities and Exchange Commission and the New York Stock
Exchange reports of ownership and changes in ownership of common
stock of the Corporation. Officers and directors are required by SEC
regulation to furnish the Corporation with copies of all Section 16(a)
forms they file.
Based solely on review of the copies of such reports furnished
to the Corporation or written representations that no other reports
were required, the Corporation believes that, during the 1996 fiscal
year, all filing requirements applicable to its officers and directors
were complied with except that one report, covering an aggregate of
two transactions, was filed late by Mr. Klinedinst.
DATE FOR SUBMISSION OF SHAREHOLDER PROPOSALS
Under Rule 14a-8 of the Securities Exchange Act of 1934, as
amended, any shareholder who wishes to include a proposal for
shareholder action in next year's Proxy Statement must submit
such proposal to the Corporation (along with other information
called for in Rule 14a-8) no later than November 4, 1997. The
Corporation will at the time of any such submission determine
whether or not the proposal is proper for inclusion in the Proxy
Statement.
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
Some of the Directors of the Corporation and the entities with
which they are associated were customers of and had various
transactions with the Corporation's subsidiary bank in the
ordinary course of business during 1996. All loans, loan
commitments and sales of notes included in these transactions
were made in the ordinary course of business, on substantially
the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with
other persons and did not involve more than the normal risk of
collectability or present other unfavorable features.
Mr. Bridgeland, a Director of the Corporation, is a partner in
the law firm of Taft, Stettinius & Hollister, which provides
legal counsel to the Corporation.
Ms. Buyniski, a Director of the Corporation, is President and
Chief Executive Officer of United Medical Resources, Inc., which
acts as third party administrator for some of the medical plans
offered by the Corporation and its subsidiaries.
Mr. Klinedinst, a Director of the Corporation, is Chairman and
Chief Executive Officer of Thomas E. Wood, Inc., which provides
insurance brokerage services to the Corporation.
Mr. O'Maley, a Director of the Corporation, is Chairman,
President and Chief Executive Officer of Ohio National Life
Insurance Company, which provides life insurance for the
Corporation's employees.
Mr. Hayden, a Director of the Corporation, is Chairman of the
Board, Chief Executive Officer, and a Director of the Midland
Company, a subsidiary of which provides insurance to a
subsidiary of the Corporation.
INDEPENDENT AUDITORS
The Board of Directors appointed Arthur Andersen LLP as
independent auditors of the Corporation and its subsidiaries for
the year 1996. The Corporation anticipates that Arthur Andersen
LLP will be appointed independent auditors for 1997 at the
regular meeting of the Board of Directors to be held in April.
Representatives of Arthur Andersen LLP will be present at the
Annual Meeting serving as inspectors of election. They will
have an opportunity to make a statement if they wish to do so,
and they will also be available to respond to questions raised
at the meeting.
OTHER BUSINESS
The Board of Directors knows of no other matters to be
presented at the Annual Meeting. If any other matters arise
before the meeting, the Board of Directors intends for the
holders of the proxies to vote in accordance with the
recommendations of Management.
By order of the Board of Directors,
/s/ Jennie Carlson
Jennie P. Carlson
Senior Vice President,
Deputy General Counsel and Secretary
Cincinnati, Ohio
February 28, 1997
YOU MAY REQUEST A COPY OF THE FORM lO-K ANNUAL REPORT FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION (LESS EXHIBITS) BY
CALLING (513) 632-4008 OR WRITING TO DAVID M. MOFFETT, EXECUTIVE
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER, STAR BANC
CORPORATION, 425 WALNUT STREET, CINCINNATI, OHIO 45201.
EHIBIT TO PROXY STATEMENT
STAR BANC CORPORATION
FEBRUARY 28, 1997
STAR BANC CORPORATION
1996 STOCK INCENTIVE PLAN
1. Name and Purpose. This Plan shall be known as the Star Banc
Corporation 1996 Stock Incentive Plan (the "Plan"). The purpose
of the Plan is to advance the interests of Star Banc Corporation
(the "Corporation") by providing material incentive for the
continued services of key employees and by attracting able
personnel to employment with the Corporation and its
Subsidiaries. The term "Subsidiary" as used herein means a
subsidiary corporation of the Corporation as the term is defined
in Section 424(f) of the Internal Revenue Code of 1986 as
amended (the "Code").
2. 1986 and 1991 Stock Incentive Plans. The Star Banc
Corporation 1986 Stock Incentive Plan, (the "1986 Plan"), approved
by shareholders of the Corporation at their meeting in April of
1986, authorized the Corporation to grant stock incentives
covering 600,000 shares. The Star Banc Corporation 1991 Stock
Incentive Plan, approved by shareholders of the Corporation
initially at their meeting in April of 1991 and approved
subsequently in amended and restated form at their meeting in
April of 1994 (together, the "1991 Plan"), authorized the
Corporation to grant stock incentives covering 2,500,000 shares.
The 1986 Plan and the 1991 Plan are hereby amended and restated
in their entirety so that their terms and conditions match
exactly as the terms and conditions of this 1996 Plan, with the
exception of the number of shares authorized under each Plan and
the termination date of each Plan, which shall remain unchanged.
Grants of remaining authorized shares under the 1986 and 1991
Plans, and administration of awards made under those plans,
shall be governed by the terms and conditions set forth herein.
In the event of a conflict between the terms and conditions of
the 1986 and 1991 Plans, and those set forth herein, this
document shall govern.
3. Administration. The Plan shall be administered by the
Compensation Committee (the "Committee") of the Board of
Directors of the Corporation. The Committee shall consist of at
least two members of the Board of Directors, each of whom is a
"disinterested person" as defined in Rule 16b-3 promulgated by
the Securities and Exchange Commission under the Securities
Exchange Act of 1934 as such Rule may be amended from time to
time or any successor rule thereto. The Committee may
establish, subject to the provisions of the Plan, such rules and
regulations as it deems necessary for the proper administration
of the Plan, and make such determinations and take such action
in connection therewith, or in relation to the Plan as it deems
necessary or advisable, consistent with the Plan.
4. Eligibility. Regular employees of the Corporation and its
Subsidiaries who are key employees, including officers, whether
or not directors of the Corporation, shall be eligible to
participate in the Plan. Such employees are herein referred to
as "Eligible Employees." Those directors who are not regular
employees of the Corporation or its Subsidiaries are not
eligible to participate in the Plan.
5. Shares Subject to the Plan.
(a) The shares to be issued and delivered by the Corporation
under the Plan are the Corporation's common shares, $5.00 par
value, which may be either authorized but unissued shares or
treasury shares.
(b) The aggregate number of common shares of the Corporation
which may be issued under the Plan (excluding those previously
authorized under the 1986 Plan and the 1991 Plan) shall not
exceed two million, five hundred thousand (2,500,000) shares;
subject, however, to the adjustment provided in Paragraph 14 in
the event of stock splits, stock dividends, exchanges of shares
or the like occurring after the effect date of this Plan. No
option may be granted under this Plan, no Restricted Shares may
be allocated under this Plan and no Performance Awards payable
in common stock can be paid under this Plan which could cause
such maximum limit to be exceeded.
(c) The maximum number of shares with respect to which options
may be granted to any individual during any one year period is
600,000.
(d) Common shares covered by an option which is no longer
exercisable with respect to such shares shall again be available
for issuance in connection with other options granted under this
Plan. Common shares repurchased by the Corporation as provided
in Paragraph 12, in respect of which no benefits of ownership
have been received, shall again be available for issuance in
connection with other allocations of Restricted Shares under
this Plan.
6. Grant of Options. The Committee may from time to time, in
its discretion and subject to the provisions of the Plan, grant
options to any or all Eligible Employees. Employees to whom
options have been granted are herein referred to as "Optionees".
Each option shall be embodied in an "Option Agreement" signed
by the Optionee and the Corporation providing that the option
shall be subject to the provisions of this Plan and containing
such other provisions as the Committee may prescribe not
inconsistent with the Plan.
7. Terms and Conditions of Option. All options granted under
the Plan shall contain such terms and conditions as the
Committee from time to time determines, subject to the foregoing
and following limitations and requirements.
(a) Form of Option: Incentive Options and Non-Qualified Options
may be granted under this Plan. An "Incentive Option" shall
mean an option granted under this Plan which is designated to be
an incentive stock option under the provisions of Code Section
422; and any provisions elsewhere in this Plan or in any such
Incentive Option which would prevent such options from being an
incentive stock option may be deleted and/or voided
retroactively to the date of the granting of such option, by
action of the Committee. A "Non-Qualified Option" shall mean an
option granted under this Plan which is not an incentive stock
option under the provisions of Code Section 422, and which is
exercisable even though there is outstanding an Incentive Option
which was granted before the granting of the Non-Qualified
Option to the same Options. Such Non-Qualified Option shall not
be affected by any actions taken retroactively as provided above
with respect to Incentive Options.
(b) Option Price: The option price per share of an Incentive
Option shall not be less than 100% of the fair market value of
the Corporation's common shares on the date the option is
granted, as determined by the Committee in a manner consistent
with the requirements of the Code for incentive stock options.
(c) Period within which Options May Be Exercised: The period of
each option shall be fixed by the Committee, but no Incentive
Option may be exercised prior to the expiration of one year
after the date of granting the Incentive Option, and no option,
whether an Incentive Option or a Non-Qualified Option, may be
exercised after the expiration of ten years from the date the
option is granted.
(d) Termination of Option by Reason of Termination of
Employment: Except as otherwise provided by the Committee in any
option or other agreement to which an Optionee is party, if an
Optionee's employment with the Corporation and its Subsidiaries
terminates, all options granted under this Plan to such Optionee
which are not exercisable on the date of such termination of
employment shall terminate immediately. Any remaining options
shall terminate if not exercised before the expiration of the
following periods, or at such earlier time as may be applicable
under paragraph 6(c) above;
(i) if the option is a Non-Qualified Option, upon termination of
employment, if such termination was not a result of early or
normal retirement (as determined by the chief executive officer
of the Corporation), death or if the Optionee is disabled (as
defined in Code Section 422(c)(6) [hereinafter "Disability"]) of
the Optionee; or
(ii) if the option is an Incentive Option, three (3) months
following such termination of employment, if such termination
was not a result of early or normal retirement (as determined by
the chief executive officer of the Corporation), death or
Disability of the Optionee; or
(iii)for all options, one (1) year following the date of early
or normal retirement (as determined by the chief executive
officer of the Corporation), death or commencement of
Disability, if the Optionee was an employee of the Corporation
and/or any Subsidiary at the time of his death or the
commencement of Disability or for Non-Qualified Options at such
later time as the Committee deems appropriate.
(e) Non-transferability; Exceptions: Each option and all rights
thereunder shall be exercisable during the Optionee's lifetime
only by him and shall be non-assignable and non-transferable by
the Optionee, except that a Non-Qualified Option may be
transferred pursuant to a "domestic relations order" as defined
in Section 414(p)(1)(B) of the Code. In the event of the
Optionee's death, such options and rights thereunder are
transferable by his will or by the laws of descent and
distribution. In the event the death of an Optionee occurs,
the representative or representatives of his estate, or the
person or persons who acquired (by bequest or inheritance) the
rights to exercise his stock options granted under this Plan,
may exercise any of the unexercised options in whole or in part
prior to the expiration of the applicable exercise period, as
specified in Paragraph 6(d) above.
(f) More than One Option Granted to an Optionee: More than one
option, and more than one form of option, may be granted to an
Optionee under this Plan; provided, however, that the aggregate
fair market value (determined as of the time the option is
granted) of the shares for which Incentive Options are
exercisable for the first time by any Optionee during any
calendar year (under the Plan and all such plans of the
Corporation and any parent or subsidiary corporation) shall not
exceed $100,000 or any other limit established by the Code. A
single option grant may include both an Incentive Option and a
Non-Qualified Option.
8. Method of Exercise of Options. An option granted under this
Plan that is eligible to be exercised may be exercised by
written notice to the Committee, signed by the Optionee, or by
such other person as is entitled to exercise such option. The
notice of exercise shall state the number of shares in respect
of which the option is being exercised, and shall either be
accompanied by the payment of the full option price for such
shares, or shall fix a date (not more than ten business days
from the date of such notice) for the payment of the full
purchase price of the shares being purchased. All or any
portion of the payment may be made by the transfer of common
shares of the Corporation from the Optionee to the Corporation,
or the Optionee may direct that a portion of the shares to be
issued upon exercise of the option be withheld by the
Corporation as payment, to the extent permitted by law. Such
shares shall be valued for this purpose at their fair market
value on the date they are transferred to, or withheld by, the
Corporation as payment, determined in the same manner as is
provided in Paragraph 7(b) hereof. A certificate or
certificates for the common shares of the Corporation purchased
through the exercise of an option shall be issued in regular
course after the exercise of the option and payment therefor.
During the option period no person entitled to exercise any
option granted under this Plan shall have any of the rights or
privileges of a shareholder with respect to any shares issuable
upon exercise of such option until certificates representing
such shares shall have been issued and delivered.
9. Allocation and Purchase of Restricted Shares.
(a) The Committee may from time to time, in its discretion and
subject to the provisions of the Plan, allocate common shares to
any or all Eligible Employees. Common shares allocated under
this Paragraph 9 of the Plan are referred to herein as
"Restricted Shares." Employees to whom Restricted Shares have
been allocated are herein referred to as "Participants." Each
Participant to whom an allocation of Restricted Shares has been
made shall have the right to purchase such Restricted Shares as
herein provided.
(b) The Committee shall advise each Participant to whom an
allocation of Restricted Shares has been made in writing of the
terms of the offer, including the number of shares which such
person shall be entitled to purchase, the purchase price per
share, and any other terms, conditions and restrictions relating
thereto. The Participant shall have ten (10) days from the date
of the offer to accept such offer. The Committee may, in the
exercise of its discretion, extend the term of any offer.
Subject to the express provisions of the Plan, the Committee
shall have the power to make such offer subject to any terms and
conditions it may establish and the offers made to different
persons, or to the same person at different times, may be
subject to terms, conditions and restrictions which differ from
each other. Each allocation shall be embodied in a "Restricted
Share Agreement" signed by the Participant and the Corporation
providing that the Restricted Shares shall be subject to the
provisions of this Plan and containing such other provisions the
Committee may prescribe not inconsistent with the Plan.
(c) The purchase price of the shares offered under this Plan
shall be any lawful consideration established by the Committee
in its discretion. If a Participant elects to purchase
Restricted Shares, he shall pay the purchase price in full, at
the principal office of the Corporation, prior to expiration of
the offer. Upon payment of the purchase price, certificates
representing the shares shall be issued to the Participant,
which certificates shall bear an appropriate legend reflecting
that such shares are subject to the restrictions contained in
this Plan.
10. Restrictions Applicable to Restricted Shares. By purchasing
the Restricted Shares allocated to him under this Plan, the
Participant agrees and consents to the restrictions described in
this Plan for a period determined by the Committee at the time
of such allocation, said period referred to herein as the
"Restricted Period." For the duration of the Restricted Period
(unless the restrictions earlier lapse or are removed by the
Committee), Restricted Shares issued under this Plan shall not
be transferred, delivered, assigned, sold, or disposed of in any
manner, nor pledged or otherwise hypothecated. On the last day
of the Restricted Period, or upon the earlier lapse or removal
of restrictions, such Restricted Shares shall cease to be
subject to the restrictions under this Paragraph 10 of the Plan.
11. Termination of Employment During Restricted Period.
(a) If a Participant's employment with the Corporation and its
Subsidiaries terminates because of death, Disability, or
retirement after attaining normal retirement age under the
provisions of any retirement plan of the Corporation or any
Subsidiary, the restrictions under Paragraph 10 of this Plan
shall automatically terminate as to that number of the
Restricted Shares owned by the Participant which is equal to the
total number of such Restricted Shares multiplied by a fraction,
the numerator of which is the number of full months which have
elapsed from the date of allocation and the denominator of which
is the total number of months during the Restricted Period. The
Participant (or his estate, heirs, or legatees) shall be
required to resell the remaining Restricted Shares to the
Corporation at a price per share equal to the original purchase
price paid by the Participant for such shares, unless the
Committee shall, in its discretion, waive the restrictions under
Paragraph 9 as to any part or all of such remaining Restricted
Shares.
(b) If a Participant's employment with the Corporation and its
Subsidiaries terminates during the Restricted Period other than
by reason of death, Disability, or retirement after attaining
normal retirement age under the provisions of any retirement
plan of the Corporation or its Subsidiaries, the Participant
shall be required to resell all of the Restricted Shares to the
Corporation at a price per share equal to the original purchase
price paid by the Participant for such shares, unless the
Committee shall, in its discretion, waive the restrictions under
Paragraph 9 as to any part or all of the Restricted Shares.
12. Resale of Restricted Shares. In the event a Participant is
required to resell Restricted Shares to the Corporation as the
result of the termination of the Participant's employment as
described in Paragraph 11, the Corporation by written notice to
the Participant shall specify a date not less than five nor more
than ten days from the date of such notice to consummate the
purchase and sale of such Restricted Shares at the principal
office of the Corporation. The Participant shall deliver to the
Corporation certificates representing such Restricted Shares,
duly endorsed and in proper form for transfer, and upon the
receipt of such share certificates, the Corporation shall
deliver to the Participant a check in the amount of the purchase
price. If the Participant fails to deliver the share
certificates to the Corporation at the time specified in such
notice, the Corporation may deposit the purchase price with the
Treasurer of the Corporation, and thereafter the shares shall be
deemed to have been transferred to the Corporation and the
Participant, despite his failure to deliver the share
certificates, shall have no further rights as a stockholder of
the Corporation. In such event, the Treasurer of the
Corporation shall continue to hold the purchase price for such
shares and shall make payment thereof, without interest, upon
delivery of the share certificates to the Corporation.
13. Performance Awards. The Committee may, from time to time,
in its discretion and subject to the provisions of the Plan,
provide an incentive opportunity ("Performance Awards") to any
or all Eligible Employees based on achievement by the
Corporation for any calendar year or other period chosen by the
Committee. Each Performance Award shall be embodied in a
"Performance Award Agreement" signed by the Participant and the
Corporation providing that the Performance Award shall be
subject to the provisions of this Plan and containing such other
provisions the Committee may prescribe not inconsistent with the
Plan. The Committee will determine, in its sole discretion, the
performance targets and whether Performance Awards should be
payable in the form of the Corporation's common stock or cash.
If the Eligible Employee requests, prior to the date on which
payment of the Performance Award is to be made, that such
payment not be made until termination of employment by such
Eligible Employee, then the Committee shall consider and act
upon such request promptly. If no request is made by such
Eligible Employee, the payment shall be made in the time period
chosen by the Committee.
14. Share Adjustments. In the event there is any change in the
Corporation's common shares resulting from stock splits, stock
dividends, combinations or exchange of shares, or other similar
capital adjustments, equitable proportionate adjustments shall
be made by the Committee in (a) the number of shares available
for option and issuance under this Plan, (b) the number of
shares subject to options granted under this Plan, and (c) the
option price of optioned shares.
15. Merger, Consolidation, or Sale of Assets. Except as
otherwise provided in any Option Agreement, Restricted Share
Agreement, Performance Award Agreement or other agreement
approved by the Committee to which an Eligible Employee is a
party, in the event the Corporation shall engage in a Change of
Control, as defined in this Section 15, each option, Restricted
Share and Performance Award shall, without regard to any vesting
schedule, restriction or performance target, automatically and
immediately become fully exercisable or payable, as the case may
be, immediately prior to such Change of Control. Options and
restricted shares granted under this Plan shall continue as
provided in Section 16.
For purposes of this Agreement, a Change of Control of the
Corporation shall mean:
(a) The acquisition by any individual, entity or group (a "Person")
within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 35% or more of either (i) the then outstanding
shares of common stock of the Corporation (the "Outstanding
Corporation Common Stock") or (ii) the combined voting power of the
then outstanding voting securities of the Corporation entitled to
vote generally in the election of directors (the "Outstanding
Corporation Voting Securities"); provided, however, that for
purposes of this subsection (a), the following acquisitions shall
not constitute a Change of Control: (i) any acquisition directly
from the Corporation, (ii) any acquisition by the Corporation,
(iii) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Corporation or any corporation
controlled by the company, or (iv) any acquisition by any
corporation pursuant to a transaction which complies with
clauses (i), (ii), and (iii) of subsection (c) of this Section
15; or
(b) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof
whose election, or nomination for election by the Corporation's
shareholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result
of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board; or
(c) Consummation of a reorganization, merger or consolidation
or sale or other disposition of all or substantially all of the
assets of the Corporation (a "Business Combination"), in each
case, unless, following such Business Combination, (i) all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Corporation
Common Stock and Outstanding Corporation Voting Securities
immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 50% of, respectively, the then
outstanding shares of common stock and the combined voting power
of the outstanding voting securities then entitled to vote
generally in the election of directors, as the case may be, of
the Corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result
of such transaction owns the Corporation or all or substantially
all of the Corporation's assets either directly or through one
or more subsidiaries) in substantially the same proportions as
their ownership, immediately prior to such Business Combination
of the Outstanding Corporation Common Stock and Outstanding
Corporation Voting Securities, as the case may be, (ii) no
Person (excluding any employee benefit plan [or related trust]
of the Corporation or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly,
35% or more of, respectively, the then outstanding shares of
common stock of the Corporation resulting from such Business
Combination or the combined voting power of the then outstanding
voting securities of such corporation except to the extent that
such ownership existed prior to the Business Combination and
(iii) at least a majority of the members of the board of
directors of the Corporation resulting from such Business
Combination were members of the Incumbent Board at the time of
the execution of the initial agreement, or of the action of the
Board, providing for such Business Combination; or
(d) Approval by the shareholders of the Corporation of a
complete liquidation or dissolution of the Corporation.
16. Amendment or Termination. The Board of Directors of the
Corporation may terminate this Plan at any time, and may amend
the Plan at any time or from time to time, without obtaining any
approval of the Corporation's stockholders, except that the Plan
may not be amended (a) to increase the aggregate number of
shares issuable under the Plan for incentive stock options (but
not nonqualified stock options and excepting proportionate
adjustments made under paragraph 14 to give effect to stock
splits, etc); (b) to change the option price of optioned stock
(excepting proportionate adjustments made under Paragraph 14);
(c) to change the requirement that the option price per share of
common stock covered by an incentive stock option (but not a
nonqualified stock option) granted under this plan not be less
than 100% of the fair market value of the Corporation's common
stock on the date such option is granted; (d) to extend the time
within which options may be granted or the time without which a
granted option may be exercised; or (e) to change, without the
consent of the Optionee (or his, or his estate's, legal
representative), any option previously granted to him under the
Plan. If the Plan is terminated following a Change in Control
as defined in Section 15 of this Agreement or for any other
reason, any unexercised option shall continue to be exercisable
in accordance with its terms and the terms of this Plan,
consistently with Section 424(a) of the Internal Revenue Code,
which provides for a conversion of an existing option to an
option to acquire stock in the Business Combination at the ratio
of fair market price to option price immediately before the
Change in Control (as defined in Section 15 of this Agreement)
and Restricted Shares shall continue to be subject to the terms
of this Plan (subject to conversion to Restricted Shares of the
Business Combination at the same ratio of fair market price to
option price immediately before the Change in Control) for the
duration of the Restricted Period.
17. Corporation Responsibility. All expenses of this Plan,
including the cost of maintaining records, shall be borne by the
Corporation. The Corporation shall have no responsibility or
liability (other than under applicable Securities Acts) for any
act or thing done or left undone with respect to the price,
time, quantity, or other conditions and circumstances of the
purchase of shares under the terms of the Plan, so long as the
Corporation acts in good faith.
18. Implied Consent of Optionees and Participants. Every
Optionee, by his acceptance of an option under this Plan, and
every Participant, by his acceptance of an allocation of
Restricted Shares under this Plan, and every Eligible Employee,
by his acceptance of a Performance Award under this Plan, shall
be deemed to have consented to be bound, on his own behalf and
on behalf of his heirs, assigns, and legal representatives, by
all of the terms and conditions of this Plan.
19. No Effect on Employment Status. The fact that an employee
has been granted an option, has been allocated Restricted Shares
or awarded a Performance Award under this Plan shall not limit
or otherwise qualify the right of his employer to terminate his
employment at any time.
20. Tax Withholding The Corporation shall be entitled to deduct
from any payment to be made by it under this Plan, or to
otherwise require, prior to the issuance or delivery of any
shares or the payment of any cash to an Eligible Employee,
payment by the Eligible Employee of all applicable Federal,
state, local or other taxes required by law to be withheld. The
committee may permit, in accordance with any applicable
administrative rules established by it, an Eligible Employee to
satisfy this withholding obligation by (i) directing the
withholding from any payment of common shares by the
Corporation, or (ii) delivering to the Corporation, common
shares having a fair market value, on the date of payment, equal
to the amount of such taxes. Any fraction of a share required
to satisfy such tax obligation shall be disregarded and the
amount due shall be paid instead in cash by the Eligible
Employee.
21. Compliance with Securities Laws. Options granted and
shares issued by the Corporation pursuant to this Plan shall be
granted and issued only in full compliance with all applicable
securities laws, including laws, rules and regulations of the
Securities and Exchange Commission and applicable state Blue Sky
laws. With respect thereto, the Committee may impose such
conditions on transfer, restrictions and limitations as it may
deem necessary and appropriate to assure compliance with such
applicable securities laws.
22. Duration and Termination of the Plan. The Plan became
effective on December 10, 1996. No option shall be granted and
no allocation of Restricted Shares shall be made under the Plan
subsequent to December 9, 2006.
XXX APPENDIX XXX
STAR BANC CORPORATION Proxy
This Proxy is solicited by Management on behalf of the Board of
Directors.
I, the undersigned shareholder of Star Banc Corporation,
appoint Jerry A. Grundhofer and Jennie P. Carlson, or either of
them, with full power of substitution, as my proxies to vote all
the shares of the Corporation that I would be entitled to vote
if I attended the Annual Meeting of Shareholders of Star Banc
Corporation on Tuesday, April 8, 1997, and I revoke any proxy I
may have given previously.
SHARES
Continued on reverse side
1. Election of Directors for three year terms ending in the
year 2000:
Laurance L. Browning, Jr. For __ Against __
Victoria B. Buyniski For __ Against __
Jerry A. Grundhofer For __ Against __
J. P. Hayden, Jr. For __ Against __
Daniel J. Meyer For __ Against __
2. To amend Article Fourth of the Articles of Incorporation to
increase the number of authorized shares of common stock of the
Corporation, $5.00 par value, from 100,000,000 to
200,000,000. For __ Against __
3. To approve and adopt the Star Banc Corporation 1996 Stock
Incentive Plan, attached as an Exhibit to the Proxy Statement,
under which options to purchase shares of common stock,
restricted shares and performance awards may be granted to key
employees of the Corporation and its subsidiaries. For __ Against __
4. To transact any other business that may properly come before
the Annual Meeting.
This proxy, if properly executed, will be voted in the manner
you direct. This proxy will be voted in accordance with
management's recommendations if you give no direction on an
issue.
Please sign your name exactly as it appears on this proxy. If
your shares are held jointly, both holders must sign. If you
are signing as attorney, executor, administrator, trustee,
guardian, or other fiduciary, please list your full title. If
you are an authorized individual signing on behalf of a
corporation or partnership, please state the full corporate or
partnership name.
NAME DATE NAME DATE
__________________________________ _____________________________________
